What is the value of one share of the stock to you today

Assignment Help Financial Management
Reference no: EM131338545

Excel Corporation has recently witnessed a period of depressed earnings performance. As a result, cash dividend payments have been suspended. Investors do not anticipate a resumption of dividends until two years from today, when a yearly dividend of $0.25 will be paid.

That yearly dividend is expected to be increased to $0.75 in the following year and $1.50 in the year after that. Beyond the time when the $1.50 dividend is paid, investors expect Excel's dividends to grow at an annual rate of 5 percent into perpetuity.

All dividends are assumed to be paid at the end of each year. If you require an 18 percent rate of return on Excel's stock, what is the value of one share of this stock to you today?

Reference no: EM131338545

Questions Cloud

Determine the yield to call as of december 1 : Explain why an investor would be willing to pay $1,050 on December 1, 2004, for one of these bonds when he or she is going to receive only $1,000 when the bond matures in 2034.
What are the benefits of using search engines : Take a few minutes to explore the Copyright Clearing Center's Copyright Basics tutorial.Briefly describe copyright, public domain, and fair use. Provide a unique example of fair use. Provide an example of when copyright would be violated. Be sure ..
Will the ship reach the port by following this plan : How many hours will it take to arrive at the turning point if the captain chooses a speed of 23 miles per hour?
Define the problem the editors were trying to address : 1. How do you define the problem the editors were trying to address? Was this a technical or an adaptive challenge? 2. What is your reaction to what the principal did in this situation? How do you think what she did fits in with providing directio..
What is the value of one share of the stock to you today : If you require an 18 percent rate of return on Excel's stock, what is the value of one share of this stock to you today?
Relation in purchase decision making : Define Consumer Behavior and describe its relation in purchase decision making?
What is value of a share of stock of dravo to an investor : What is the value of a share of stock of Dravo to an investor who demands a 24 percent rate of return on this stock?
Explain the essential skills that would make a person good : FIN100:Reflect on what you learned regarding the importance and structure of job application cover letters. Ascertain the key factors an employer may take into consideration when determining whether or not an applicant receives a job interview.Id..
How much would you be willing to pay per share : If you require a 24 percent rate of return on an investment such as this, how much would you be willing to pay per share?

Reviews

Write a Review

Financial Management Questions & Answers

  New supermarkets is major capital budgeting project

Opening a series of new supermarkets is a major capital budgeting project for the company. Describe and discuss the main items on the income statement and balance sheet that you think will be impacted by this new undertaking. Explain why you chose th..

  Use Goal Seek in order to find this rate of return

Assume “Jane” saves $10,000 per year for 10 years starting at age 25. At age 35 she no longer is able to save but leaves her accumulated savings invested until age 65 when she retires.  At what assumed rate of return are John and Jane’s wealth at age..

  What tax rate would investors indifferent between two bonds

A corporate bond currently yields 8.7%. Municipal bonds with the same risk, maturity, and liquidity currently yield 5.5%. At what tax rate would investors be indifferent between the two bonds?

  Depreciation expense-interest expense and tax rate

Given the following information: Sales Growth Rate 25% COGS / Sales 65% Operating Expense / Sales 20% Depreciation Expense (000) $40 Interest Expense (000) $10 Tax Rate 40% Dividends (000) $20.

  Opportunity cost-stock or bond valuation

Example of TVM concept , Describe any event with the concept - be it a loan, opportunity cost, stock or bond valuation, or while subscribing for any new financial plan, or beyond.

  Reduction in profit contribution from decline in sales

A company is considering shortening its credit period from 30 days to 20 days and believes as a result of its change, its average collection period will decrease from 36 days to 30 days. Bad debt expenses are also expected to decrease from 1.2 percen..

  Article of the labor law would you use to file this claim

An employee submitted a letter of resignation and notifying his employer that he is leaving the company after thirty days as required in his employment contract. If you were the employee how do initiate the law suit against the employer. Describe the..

  Principles of finance on average sits

Cengage Learning will send you the texts with these terms:  net 30 days. Looking at old inventory reports you find that Principles of Finance on average sits on the shelf for 64 days after it is received until it is sold.

  Use a demand and supply graph

Use a demand and supply graph for the federal funds market to show the equilibrium federal funds rate and the discount rate before the policy action of January 22, 2008.

  Calculate the dirty price for the T-Note

On October 20,2013 you purchase a S10,000 T-note that matures on July 1,2016. The coupon rate on the T-note is 6% and the price at which you buy is 102:24. Calculate the accrued interest due to the seller from the buyer at the time of purchase. Calcu..

  Firm pledges their accounts receivables

If a firm factors their accounts receivable with recourse, then they are still liable if their customer doesn’t pay. If a firm has a Floating Lien, then they are prohibited from selling their inventory. If a firm pledges their Accounts Receivables, t..

  Find the future value at the end of three year

Find the future value at the end of 3 years of $225 invested today and on the next two anniversaries at an interest rate of 7 per cent compounded quarterly. Find the present value of the following year end cash flow stream: 500, 600, 700, 800, (100),..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd